Correlation Between Townsquare Media and Carnegie Clean

Can any of the company-specific risk be diversified away by investing in both Townsquare Media and Carnegie Clean at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Townsquare Media and Carnegie Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Townsquare Media and Carnegie Clean Energy, you can compare the effects of market volatilities on Townsquare Media and Carnegie Clean and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Townsquare Media with a short position of Carnegie Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Townsquare Media and Carnegie Clean.

Diversification Opportunities for Townsquare Media and Carnegie Clean

0.41

Correlation Coefficient

Townsquare Media  Carnegie Clean

Very weak diversification

The 3 months correlation between Townsquare and Carnegie is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Townsquare Media and Carnegie Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnegie Clean Energy and Townsquare Media is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Townsquare Media are associated (or correlated) with Carnegie Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnegie Clean Energy has no effect on the direction of Townsquare Media i.e., Townsquare Media and Carnegie Clean go up and down completely randomly.

Pair Corralation between Townsquare Media and Carnegie Clean

Assuming the 90 days horizon Townsquare Media is expected to under-perform the Carnegie Clean. But the stock apears to be less risky and, when comparing its historical volatility, Townsquare Media is 2.3 times less risky than Carnegie Clean. The stock trades about -0.14 of its potential returns per unit of risk. The Carnegie Clean Energy is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2.18  in Carnegie Clean Energy on December 23, 2024 and sell it today you would lose (0.30) from holding Carnegie Clean Energy or give up 13.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Townsquare Media  vs.  Carnegie Clean Energy

Townsquare Media

Risk-Adjusted Performance

Very Weak

Over the last 90 days Townsquare Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Carnegie Clean Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carnegie Clean Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Townsquare Media and Carnegie Clean

The main advantage of trading using opposite Townsquare Media and Carnegie Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Townsquare Media position performs unexpectedly, Carnegie Clean can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Carnegie Clean will offset losses from the drop in Carnegie Clean's long position.

The idea behind Townsquare Media and Carnegie Clean Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.